Maybank Investment Bank has foreseen visible growth ahead for Singapore’s co-working space player JustCo, underpinned by a visible expansion pipeline and improving operational efficiency.

The research house said in a recent note that it forecasts the firm’s workstation capacity to grow at a compound annual growth rate (CAGR) of about 19.5 percent over FY25 to FY28, supporting a revenue CAGR of about 22 percent.

“As occupancy improves by an estimated about 3 percentage points by FY28, we expect stronger operating leverage to drive cash earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expansion from 9.4 percent in FY25 to 14.1 percent in FY28,

“Consequently, we forecast its C=cash EBITDA to grow at a CAGR of about 43 percent over FY25 to FY28,” it added.

It is noted that JustCo delivered a year of strong operating performance in FY25, with revenue increasing 12.5 percent year on year, supported by higher occupancy (+6 percentage points year on year), workstation capacity (+12.9 percent year on year) and memberships (+13.1 percent year on year).

The group also returned to profitability of $2.7 million, while results from operating activities increased more than fourfold as improving utilization drove meaningful operating leverage.

The firm’s cash EBITDA surged 118.5 percent year on year to $13.5 million, demonstrating the scalability of its business model.

Maybank applied a target FY27 enterprise value (EV)/Cash EBITDA multiple of 8.5 times, a modest premium to the lower quartile of peers, reflecting JustCo’s strong FY25–FY28 revenue and Cash EBITDA CAGR of about 22 percent and about 43 percent, balanced against execution risks and its relatively limited operating scale.

“At the current share price, JustCo trades at just 3.3 times FY27 EV/Cash EBITDA with about S$151 million ($117 million) of net cash, which we believe does not reflect its growth potential. We initiate coverage with a BUY and a target price of S$1.02,” said the research house.

JustCo is a flexible workspace platform with 50 centers across ten gateway cities, serving about 35,000 workstations.

The firm aims to build Asia-Pacific (APAC)’s leading flex office platform through disciplined regional expansion, an increasingly asset-light model and a scalable multi-brand strategy backed by strong landlord relationships.

It capitalizes on the structural shift from traditional office leasing to flexible workspace by connecting landlords with businesses seeking agile office solutions.

“JustCo is at an earnings inflection point, transitioning from post-COVID recovery to an expansion-led growth phase,” said Maybank.

The research house opined that APAC flex office industry remains in the early stages of structural growth, with penetration still well below mature markets.

According to Maybank, JustCo’s upside included faster occupancy ramp-up at new centers and stronger enterprise expansion across APAC.

It is noted that new centers achieve more than 60 percent occupancy within the first 2-3 months, driving stronger-than-expected operating leverage and Cash EBITDA.

Meanwhile, larger corporates accelerate regional expansion and increase workstation commitments, particularly in Japan and new markets such as India and Hong Kong, supporting occupancy and pricing power.

The firm’s key risks, however, include occupancy volatility, lease cost mismatch, execution risk from expansion, said Maybank.

On expansion execution risk, the research house highlighted the delays in opening committed centers, higher fit-out costs or slower customer onboarding reduce expected returns on expansion capital.

On lease cost mismatch, it explained that fixed lease obligations rise ahead of occupancy, may compress margins and reduce cash generation if demand falls short of expectations.

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